Economy

As many as 9 million U.S. mortgages in the foreclosure pipeline or already through the process may face legal challenges because of questions about the validity of documents, according to Morgan Stanley.... Another potential issue is whether title insurance companies will issue policies required for mortgages if there is uncertainty with the ownership, Levin wrote.

here is one legal scenario, according to Prof. Levitin: The mortgage is still owed, but there's going to be a problem figuring out who actually holds the mortgage, and they would be the ones bringing the foreclosure. You have a trust that has been getting payments from borrowers for years that it has no right to receive. So you might see borrowers suing the trusts saying give me my money back, you're stealing my money.

You're going to then have trusts that don't have any assets that have been issuing securities that say they're backed by a whole bunch of assets, and you're going to have investors suing the trustees for failing to inspect the collateral files, which the trustees say they're going to do, and you're going to have trustees suing the securitization sponsors for violating their representations and warrantees about what they were transferring.

"The bank used the usual fabricated and forged documents to foreclose," the Earls wrote in their court petition, in which they describe signatures by bank personnel that do not match, from document to document -- an indication to them that documents were not properly reviewed and were fabricated.

The Earls question who owns the loan, as the foreclosure documents list GRP Financial Services, but there have been several lenders listed in the past few years. The original lender was Washington Mutual Bank, which became JPMorgan Chase after the banks merged. The loan went to Bank of America on the same day that Chase sent the homeowners a notice of default. The Earls argue that Chase never properly assumed the loan and thus did not have the right to sell it off. And in turn, the investors, Conejo Capital Partners, did not properly purchase the property either.

As banks face allegations of possible mortgage fraud, title companies are making it harder to write policies for those properties.

Houston-based Stewart Title is setting new rules for sales of some foreclosed homes. The company is issuing guidelines to its agents making it difficult to write policies on property foreclosed upon by four banks whose process is in question: JP Morgan Chase, Bank of America, OneWest Bank or Ally Financial's GMAC Mortgage unit.

Members of the rate-setting Federal Open Market Committee viewed recent growth and inflation trends as unsatisfactory.

“Several members noted that unless the pace of economic recovery strengthened or underlying inflation moved back toward a level consistent with the FOMC’s mandate, they would consider it appropriate to take action soon,” the summary said.

The banks' inability to prove they own the mortgages they're trying to foreclose on is not a new story, notes Dan Alpert, managing principal at Westwood Capital. In 2007, a federal judge ruled Deutsche Bank couldn't proceed with 14 foreclosures because the firm lacked proof of ownership of those mortgages. That landmark case helped spur a "show me the note" movement among American homeowners facing foreclosure.

Blame dwindling pensions, the rising cost of living or the rocky stock market -- a growing number of seniors are insolvent.

The share of insolvent consumers among people aged 55 and older has more than quadrupled in the past decade, hitting 20.6 per cent last year, the Office of the Superintendent of Bankruptcy Canada said Tuesday. It’s the steepest increase among all age groups.

A surprise contraction in the US corn supply will push up beef, pork and chicken prices in what parts of the industry warn will be a “game changer”.

With the US harvest halfway through, the US Department of Agriculture said the average corn field will yield 155.8 bushels per acre, 6.7 bushels less than its September estimate. “The impact of this is huge, a complete game changer,” says Gregg Doud, chief economist of the National Cattlemen’s Beef Association. “This is an all-time record change in corn yield from one month to the next. We were caught completely flat-footed.”

Faulty foreclosures may cost U.S. lenders $2 billion for every month that home seizures are delayed and the tab could reach $6 billion, according to Paul Miller, the bank analyst at FBR Capital Markets.

The ratings agency has downgraded hundreds of billions of dollars worth of RMBS the past year as loss expectations steadily increased due to home prices remaining low and unemployment staying high in the midst of a shaky economic recovery.....Alt-A loans, falling between prime and subprime, were typically given to prime-rated borrowers who didn't document assets and/or income.

The dire financial situation faced by the city of Detroit could impact the cost of borrowing and access to credit by Michigan's government, according to a newly released report by the nonpartisan Senate Fiscal Agency. Of pressing concern to the state is a bankruptcy by the city, or other fiscal or cash crisis, the report said.

Cnooc, one of the largest Chinese state-run oil companies, has agreed to buy a third of Chesapeake Energy’s oil and gas assets in a south Texas shale deposit for $1.1 billion, in a deal that will ultimately be worth double that amount. It is the largest Chinese purchase of United States energy assets ever and the latest in a string of similar deals by Beijing around the world.

Hungary plans tough public sector staff cuts in 2011 and may impose taxes on the energy sector to keep its pledge to the European Union to cut its budget deficit below 3 percent of GDP, a local website said on Tuesday.

Almost one million jobs will be lost as a result of the Government's programme of deficit reduction – many in the very regions and industries that have already suffered most in the recession, according to a powerful report from a leading firm of accountants. Economists at PricewaterhouseCoopers say that a further half a million jobs will be lost among private sector contractors and suppliers as a result of the Chancellor's anticipated £84bn in cuts, due to be announced in detail in eight days' time.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

"Europe's sovereign debt crisis isn't over and will continue to spread, first to Japan and then to the U.S., warned renowned Harvard University professor, Niall Ferguson.

"There are more of those (sovereign debt crises) to come and, ultimately, it is going to come to Japan and the United States. And those crises of sovereign debt will be the big story," he told CNBC Wednesday.

The explosion of public debt will inevitably lead to either inflation or default, Ferguson added.

"It just depends on whether you borrow in your own currency in which case is probably going to be inflation; or someone else's, in which case is probably a default.""

"The cities, counties and authorities of New York have promised more than $200 billion worth of health benefits to their retirees while setting aside almost nothing, putting the public work force on a collision course with the taxpayers who are expected to foot the bill.

The total cost appears in a report to be issued on Wednesday by the Empire Center for New York State Policy, a research organization that studies fiscal policy.

It does not suggest that New York must somehow come up with $200 billion right away.

But the report casts serious doubt over whether medical benefits for New York’s retirees will be sustainable, given the sputtering economy and today’s climate of hostility toward new taxes and taxpayer bailouts. "

"California has borrowed $8.4 billion from the federal government to pay unemployment insurance benefits and, just like any charge account, a big interest payment will be due next year, possibly as high as $500 million.

It could be a major challenge for the state's stretched fiscal coffers because the money cannot be repaid from the unemployment insurance trust fund. Under federal law, the money will have to come from the general fund or some other source.

California's unemployment insurance trust fund plunged into the red in January 2009. California is among 32 states and the Virgin Islands that have borrowed from the federal government to pay unemployment benefits.

Collectively, as of August, they owed Uncle Sam $40.4 billion. The top 10 states, led by California, accounted for three-quarters of the total."

"Kansas City Federal Reserve President Thomas Hoenig, who all year has steadfastly opposed the Fed's super-easy monetary policy, fleshed out his stance against further easing on Tuesday, saying it would do little to aid recovery and could spark inflation."

"NEW YORK — In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in "foreclosure expert" jobs with no formal training, a Florida lawyer says.

In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn't define the word "affidavit." Others didn't know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers' accusations about document fraud.

"The mortgage servicers hired people who would never question authority," said Peter Ticktin, a Deerfield Beach, Fla., lawyer who is defending 3,000 homeowners in foreclosure cases. As part of his work, Ticktin gathered 150 depositions from bank employees who say they signed foreclosure affidavits without reviewing the documents or ever laying eyes on them — earning them the name "robo-signers.""

"The U.S. needs to come up with a plan to deal with its growing debt, Ferguson said.

“The United States is in a fiscal hole of monumental proportions and we have to get real about this,” he said. “At some point the Greek tragedy will happen to the United States if it carries on in this vein.”

There will be a move out of the world’s “massive exposure” to U.S. Treasuries into higher-yielding assets at some point, Ferguson said, adding that the switch could be “quite sudden.” "

"Inflation in the U.S. through 2012 will fall short of the Federal Reserve’s long-term goal as growth and employment are slow to rebound, according to economists surveyed by Bloomberg News.

The Fed’s preferred price gauge, which is tied to consumer spending and excludes food and fuel costs, will climb 1.2 percent next year and 1.5 percent in 2012 on average, according to the median forecast of economists polled from Oct. 4 to Oct. 12. Most policy makers project those prices will increase 1.7 percent to 2 percent in the long run."

"The Environmental Protection Agency will announce later today its decision allowing refiners to blend as much as 15 percent ethanol into fuel, up from the current 10 percent, said the person, who spoke on condition of anonymity before the announcement.

Archer Daniels Midland Co. is among producers that have pressed the EPA to raise the limit for an industry in which at least a dozen companies have sought bankruptcy protection since 2008. Opponents, including oil companies and automakers and environmental groups, say adding more ethanol may damage car engines, boost food prices and worsen air quality."

Other news, headlines and opinion:

McAlvany Weekly " Federal Reserve Easing, Like a Moth to a Flame" (Audio...QE2, Stock valuations, gold, hyperinflation, commodity prices, we are in a depression (unemployment)...great info)

Amazing how all this gets twisted into a good thing for people. It's a technicality! If your current on your mortgage then there's no problem. In each of these cases people have stopped making payments and now they think they should get to keep their houses and not pay??? It's like arresting a felon and then having him get set free because someone didn't read him his rights. He is still guilty! The crazy thing is that everyone is cheering. Anarchy will be the new norm I guess.

Time to put on Rage Against the Machine, stop paying my bills and revolt.

How about the Earls try paying their freaking mortgage. Did that ever occur to them????? They probably didn't care if daffy duck signed the papers when there were given the loan to buy their house.

alcatwize,

There are lots of different ways of looking at the same thing. In regard to houses and this website, this is one take worth watching. It was released on You Tube on the 13th of August 2007, well over 3 years ago, and well before this crisis began to strike hard.

How Millions of Americans Will Lose Their Homes [Or, "How Millions Already Have by 2010" ]

In my honest opinion, 2013 is going to make 2008 make 1929 look like 1973 ...

~ VF ~

p.s. I've just done the math with the Option Arm value's quoted in the film, and the extra interest costs amount to $137, 880 more than a standard practice mortgage of old.

That's One-Hundred And Thirty-Seven Thousand, Eight-Hundred and Eighty Dollar's, if you like the figure written in words ...

Named in honor of Charles Darwin, the Darwin Awards commemorate those who improve our gene pool by accidentally removing themselves from it. I therefore propose the ‘Nobel Award in Darwin Economics’. The recipient of the award would graciously be asked to remove (just) their ‘economic genes’ from our economic gene pool. If they teach economics, they’d be asked to cease and desist, if they were the Secretary of the Treasury, the Chairman of the Federal Reserve, or the President of the United States they’d be asked to resign.

Amazing how all this gets twisted into a good thing for people. It's a technicality! If your current on your mortgage then there's no problem. In each of these cases people have stopped making payments and now they think they should get to keep their houses and not pay??? It's like arresting a felon and then having him get set free because someone didn't read him his rights. He is still guilty! The crazy thing is that everyone is cheering. Anarchy will be the new norm I guess.

Time to put on Rage Against the Machine, stop paying my bills and revolt.

this is much bigger than just those behind on their mortgages...the CNBC article states "Real estate law requires real paper transfer of documents and titles, and a lot of the system went electronic without much regard to that persnickety rule" ...so the real problem is illegal conveyance of possibly all mortgages going back as far as 2004, including those that are being paid on & current...& there is now speculation that the entire RMBS market could be in jeopardy, as the actual notes may have never been rightly conveyed to the RMBS trusts, thus invalidating those instruments...

The enormous mortgage-bond scandal You thought the foreclosure mess was bad? You’re right about that. But it gets so much worse once you start adding in a whole bunch of parallel messes in the world of mortgage bonds. For instance, as Tracy Alloway (of FT Alphaville) says, mortgage-bond documentation generally says that if more than a minuscule proportion of notes in a mortgage pool weren’t properly transferred, then the trustee for the bondholders can force the investment bank who put the deal together to repurchase the mortgages. And it’s looking very much as though none of the notes were properly transferred. But that’s not even the biggest potential problem facing the investment banks who put these deals together. It also turns out that there’s a pretty strong case that they lied to the investors in many if not most of these deals.

It amazes me how many people scream that "if you can't make the payment, you shouldn't have bought the property!".

That's not the issue any longer! That issue is what brought this problem to the fore!

This is about the market going down SOO much that the people owe way more than their houses will ever be worth!

Case in point: I bought a house for $1.3m in Dec. 2005. I did a 10/1 interest only arm w/$320k down. So my mortgage was a little less than $1m. Now, the house was just valued at $820k! I'm now on my 5th year into the 10 year arm and can't refi without putting another $175k (difference of LTV) and another 20% ($175k+). So in order to refi I'd have to come up with $350k in cash!

Now I know many here are going to go "boohoo" because of the amounts, etc.....

But in all reality, I have to make a decision as to whether it's worth me spending $350k on this house OR bailing and eating my loss! I KNOW the value WILL NEVER come to the # I paid! I KNOW THIS! So do I pay the cash? Or do I bail and cut the loss? This is what 100's of thousands of people in this country are dealing with! Obviously, the vast majority are dealing with a much lower figure all around, but it's all relative!

So for those that continue to scream "how about those of us that have continued to pay our mortgage ontime and didn't take too much on!?!?" I think you need to understand that this is a situation that's TOTALLY different than what has ever happened in this country (or any other for that matter!). People need to decide whether they're going to spend their nest egg to keep their house, or bail to keep their cash! And it's really NOT THIER FAULT!

Just some thoughts.

BTW: This is a not my main house, but a second. I've spoken about my main house on these forums, and thank GOD I paid that off immediately!

BTW2: By saying "it's not their fault" I mean, timing sucks and many, many people are in the same boat. And because most people had zero idea that there was a problem with the market, you can't blame many of these people for doing what was "normal" at the time.

A CounterPunch Special Report

"Who Needs an Army When You Can Obtain the Usual Objective (Monetary Wealth and Asset Appropriation) Simply by Financial Means?"

Why the U.S. has Launched a New Financial World War -- And How the the Rest of the World Will Fight Back

By MICHAEL HUDSON

“Coming events cast their shadows forward.”

– Goethe

What is to stop U.S. banks and their customers from creating $1 trillion, $10 trillion or even $50 trillion on their computer keyboards to buy up all the bonds and stocks in the world, along with all the land and other assets for sale in the hope of making capital gains and pocketing the arbitrage spreads by debt leveraging at less than 1 per cent interest cost? This is the game that is being played today.

Finance is the new form of warfare – without the expense of a military overhead and an occupation against unwilling hosts. It is a competition in credit creation to buy foreign resources, real estate, public and privatized infrastructure, bonds and corporate stock ownership. Who needs an army when you can obtain the usual objective (monetary wealth and asset appropriation) simply by financial means? All that is required is for central banks to accept dollar credit of depreciating international value in payment for local assets. Victory promises to go to whatever economy’s banking system can create the most credit, using an army of computer keyboards to appropriate the world’s resources. The key is to persuade foreign central banks to accept this electronic credit.

U.S. officials demonize foreign countries as aggressive “currency manipulators” keeping their currencies weak. But they simply are trying to protect their currencies from being pushed up against the dollar by arbitrageurs and speculators flooding their financial markets with dollars. Foreign central banks find them obliged to choose between passively letting dollar inflows push up their exchange rates – thereby pricing their exports out of global markets – or recycling these dollar inflows into U.S. Treasury bills yielding only 1% and whose exchange value is declining. (Longer-term bonds risk a domestic dollar-price decline if U.S interest rates should rise.)

“Quantitative easing” is a euphemism for flooding economies with credit, that is, debt on the other side of the balance sheet. The Fed is pumping liquidity and reserves into the domestic financial system to reduce interest rates, ostensibly to enable banks to “earn their way” out of negative equity resulting from the bad loans made during the real estate bubble. But why would banks lend more under conditions where a third of U.S. homes already are in negative equity and the economy is shrinking as a result of debt deflation?

The problem is that U.S. quantitative easing is driving the dollar downward and other currencies up, much to the applause of currency speculators enjoying a quick and easy free lunch. Yet it is to defend this system that U.S. diplomats are threatening to plunge the world economy into financial anarchy if other countries do not agree to a replay of the 1985 Plaza Accord “as a possible framework for engineering an orderly decline in the dollar and avoiding potentially destabilizing trade fights.” The run-up to this weekend’s IMF meetings saw the United States threaten to derail the international financial system, bringing monetary chaos if it does not get its way. This threat has succeeded for the past few generations

my sympathies are with LogansRun and others in that situation...we've all seen the underemployment figures around 20%, and many of those now out of work over 26 weeks have mortgages and have never had a problem finding a job before this crisis, and never imagined they would be in the situation they now find themselves in...blaming the victims of this ongoing fiasco gets us nowhere...

Man, I wish I even had a single house. Right now I'm renting a one-bedroom apartment with my wife. Unfortunately the real estate situation is still in a bubble. Even if we could afford it, I would not plan on owning because the economy and jobs situation is still so fragile and looks likely to remain so for some time to come. If only the government were NOT propping up home prices...

Trust me when I say: I sold my soul to have the $ I have. And maybe it's Karma and I deserve the issue's that have come with this situation. But other's haven't done what I have and are in the same position. I won't be hurt financially by walking away or by spending the $350k to refi BUT, it's a business decision, pure and simple! But MOST WILL be hurt financially or flat out CAN'T take that type of hit! So, should the masses crucify those for this issue!?!? Not IMO!

Anyway, anyone that's in the market for a 8k sqft home in the N. VA area that's for sale at $980k, but only worth approx. $820k....please PM me immediately!

Poet wrote:

Man, I wish I even had a single house. Right now I'm renting a one-bedroom apartment with my wife. Unfortunately the real estate situation is still in a bubble. Even if we could afford it, I would not plan on owning because the economy and jobs situation is still so fragile and looks likely to remain so for some time to come. If only the government were NOT propping up home prices...

Case in point: I bought a house for $1.3m in Dec. 2005. I did a 10/1 interest only arm w/$320k down. So my mortgage was a little less than $1m. Now, the house was just valued at $820k! I'm now on my 5th year into the 10 year arm and can't refi without putting another $175k (difference of LTV) and another 20% ($175k+). So in order to refi I'd have to come up with $350k in cash!

BTW: This is a not my main house, but a second. I've spoken about my main house on these forums, and thank GOD I paid that off immediately!

Why did you buy a SECOND home during the BIGGEST RE BUBBLE in 500 years? You should have done your homework and did the math before you signed the paper work. It was too good to be true, it is! It is your fault, yet all those the didn't buy into the hype are being dragged down with the mass insanity. IF you didn't buy into the bubble, and the majority also didn't buy overpriced RE, we wouldn't be in the mess!

Amazing how all this gets twisted into a good thing for people. It's a technicality! If your current on your mortgage then there's no problem. In each of these cases people have stopped making payments and now they think they should get to keep their houses and not pay??? It's like arresting a felon and then having him get set free because someone didn't read him his rights. He is still guilty! The crazy thing is that everyone is cheering. Anarchy will be the new norm I guess.

Time to put on Rage Against the Machine, stop paying my bills and revolt.

I'm with you, buddy. The last time you expressed these sentiments I was too late to the party to offer my moral support. I'm tired of all the cry babies we are supposed to feel sorry for--move out and move on already. And this is not a defense of the banks. They can all pound sand, too. But come on! It's like I'm surrounded by people watching "Cops" and they are all rooting for the idiot running away.

Case in point: I bought a house for $1.3m in Dec. 2005. I did a 10/1 interest only arm w/$320k down. So my mortgage was a little less than $1m. Now, the house was just valued at $820k! I'm now on my 5th year into the 10 year arm and can't refi without putting another $175k (difference of LTV) and another 20% ($175k+). So in order to refi I'd have to come up with $350k in cash!

BTW: This is a not my main house, but a second. I've spoken about my main house on these forums, and thank GOD I paid that off immediately!

Why did you buy a SECOND home during the BIGGEST RE BUBBLE in 500 years? You should have done your homework and did the math before you signed the paper work. It was too good to be true, it is! It is your fault, yet all those the didn't buy into the hype are being dragged down with the mass insanity. IF you didn't buy into the bubble, and the majority also didn't buy overpriced RE, we wouldn't be in the mess!

Amazing how all this gets twisted into a good thing for people. It's a technicality! If your current on your mortgage then there's no problem. In each of these cases people have stopped making payments and now they think they should get to keep their houses and not pay??? It's like arresting a felon and then having him get set free because someone didn't read him his rights. He is still guilty! The crazy thing is that everyone is cheering. Anarchy will be the new norm I guess.

Time to put on Rage Against the Machine, stop paying my bills and revolt.

I'm with you, buddy. The last time you expressed these sentiments I was too late to the party to offer my moral support. I'm tired of all the cry babies we are supposed to feel sorry for--move out and move on already. And this is not a defense of the banks. They can all pound sand, too. But come on! It's like I'm surrounded by people watching "Cops" and they are all rooting for the idiot running away.

My God Dave,

It's so easy to talk from the perspective of hindsight. Five million foreclosure's to date and rising, and you think all people, every single one of them, trying their best to survive this s**t storm, should be cornered by a supposed high ground of moral ethicacy and judgement? There was none apparent in the banking system. It was all just business to them; a newer grander ever enriching brand series of product's, to yield even more of a squeeze on the ever more strapped pockets of a diminishing middle class, and an ever increasing working class.

Little Jimmy on his bouncy castle just got a reality check didn't he, cos Daddy just got foreclosed on, and the bailiff just came and took the bouncy castle away for in-part reparation to insurmountable debt's.

Million's more people in both the U.S. and the rest of the world are going to lose their homes, and end up cramped up, living wherever they can find three square and a bed for the night.

This calamity is so vast in scale and size Dave, I sense that it will take literally decades for the extent of its destructive forces to be fully played out, and somewhat better understood in the majority.

Look at the facts. Here we are at cm.com, where those things that are hidden in plain sight are given full view. Watch Crash Course Chapter 15 again; watch it twice to grasp its message and act upon it : -

Here's an added bonus. In cutting-edge energy circles, to replace oil as our 93% main energy of necessity, in both creating and maintaining our present and ever compounding money supply, the U.S and the rest of the globe needs to ramp up all and every alternative energy source by 4800 times, just to remain flat with what we've so far built to date. Unfortunately, and if you've been reading and digesting the forums here, to rebuild all of those structure's will take 30 plus years, and that figure is based upon present day needs. We also needed to have begun building that infer-structure into our global energy system, well over twenty years ago. To build that, half of all present energy use (40 million barrels of our depleting oil per day) will need to be re-allocated.

Then there is something on the lines of our 4% of necessary (sick) economic growth to keep this energy sapping financial monster fed, year on year. A requirement of the present system in place so that people can pay back interest on their debt, and maintain the now mountainous expansion of the money supply.

By 2015, most of those working in energy circle's are certain that the world will be sliding down the other side of Peak Oil. Everybody who thought that life had a grounded certainty to pay back those ever larger exorbitant 30 year mortgages are going to be feeling very very crushed (even YOU my friend). They'll have greater opportunity of foreclosure, and end up homeless over the coming years.

Why?

Moral?

Ethical?

The system you're living in is rigged Dave. Up is down, left is right, and two plus two equal five ...

I understand rolling the dice and taking a gamble. In this case it just didn't work out, but u did sign on the dotted line. I am curious though, why the "10/1 interest only arm"???? Arms are more risky, why not a fixed? I suppose the interest rate was much better on the Arm at the time, but now your stuck with it, although u probably couldn't refi the fixed either. I will say that at least you got some skin in the game with $350k on the line. Why a bank would ever take 0% down still blows me away.

I signed on the dotted line, no doubt. But as with any asset or investment, it's a business decision and not personal. Because of this, I have zero problem walking away from the house and losing the money. It was my mistake.

But I also have zero problem with persons that put $0 down on a home, and are now walking away because the value is so low. Again, it's a business decision....not personal. I think many people that lambast the strategic defaulters, see the act as personal, not business. I also think, many of the people that are screaming that it's wrong to walk away because they signed a contract. are flat out jealous that they don't have the balls to do it themselves!

Bottom line, there's fault to be had by all. But to beat up the defaulters for bailing, is IMO the wrong direction for your anger.

BTW VF: Morals have gone with the years. In todays world, morals are what the individual makes of them.....nothing more. Sad but true.

Logan,

Totally true, and very very sad ...

Since the beginning of this year, I've pulled a number people out of the equity fix by an estimated £1,000, 000 (roughy $1,500,000) by talking people through the Crash Course and Peak Oil. These people are just like you and me, trying to get ahead while watching their supposed asset's crumble first to nothing, and then go into negative equity. In the UK, you can't walk away from the debt like you can in the States.

I teach this from my own experience : -

In 1998, a house I bought in 2004 sold for £26,000. In 2001, that same house sold for £33,000. In 2004, that couple sold the house to me for £71,250. In 2007 I got clued up to the housing bubble and put the house back on the market.

I sold the house for £94,500 to Suzanna, who got a Northern Rock Mortgage of £110,000. With the extra £15,500 she was given, she bought a brand new car, a new heating system, new windows and doors for the property and had a three week vacation in Germany with her family.

A study I did on house prices in the area of my old house in January of this year put the new value of the property at an estimated £68,000, which already puts her £42,000 in negative equity.

If we were to use the bubble reference in Chapter 15 of the Crash Course, the reset for the price bubble in the UK will be 2015. By which time, the estimated value of the house will be between £18,000 and £23,000. Allow for inflation to (possibly) double that figure.

At the worst possible case scenario, Suzanna will be £92,000 in negative equity.

With Peak Oil set to shrink the money supply because all money in your pocket is someone elses debt, who could say that she'll be able to complete her 25 year mortgage in 22 years time?

Now, I've written the worst of the worst possible outcome above. How about I'm half right? Well, half right is a moot point, since she's already more than a quarter of the way in just 3 years.

Actually, I have no problem with those that walk away and default. That's not what bothers me. If one calculates all factors and decides walking away and not paying is in their best interest (and they also know the consequences) then fine by me. It's the ones who stop paying AND want to stay and think they should live there for free because of some signature snafu or because now someone OWES them... BS.

Also, 0$ down from a buyers perspective is great! No risk. What I don't see is why any bank would want to take on that deal. Obviously they underestimated the severity of the problem. Of course people are going to walk away when they don't stand to lose anything but a credit rating. Any bank that wrote zero loan deals are morons and should get shut down.

If you haven't seen them already, spend a few hours watching the jaw-dropping, anger-inducing, "The Secret of Oz", and the older, longer, more complete "The Money Masters" films by Bill Still.

I watched them over the last week, and it made it very clear to me who is to blame for the current crisis, and it isn't those people who are losing their homes and businesses.

Let's not get distracted - the powers that be are masters at getting us to bicker amongst ourselves while they laugh all the way to their private jets and off-grid castles.

I couldn't work out how to get the URLs in here, so just google the film titles, and you can watch them for free via YouTube and Google Videos. You do get the opportunity to make a donation if you find them interesting.

Why did you buy a SECOND home during the BIGGEST RE BUBBLE in 500 years? You should have done your homework and did the math before you signed the paper work. It was too good to be true, it is! It is your fault, yet all those the didn't buy into the hype are being dragged down with the mass insanity. IF you didn't buy into the bubble, and the majority also didn't buy overpriced RE, we wouldn't be in the mess!

I know how this sounds purely judgemental, but for me it's not even a question of making an error of judgement not realisisng the bubble was there... Why would you even buy a second house when you can only live in one?

It's so easy to talk from the perspective of hindsight. Five million foreclosure's to date and rising, and you think all people, every single one of them, trying their best to survive this s**t storm, should be cornered by a supposed high ground of moral ethicacy and judgement? There was none apparent in the banking system. It was all just business to them; a newer grander ever enriching brand series of product's, to yield even more of a squeeze on the ever more strapped pockets of a diminishing middle class, and an ever increasing working class.

Anarchy as a worthwhile social construct was exploded years ago, so these arguments don't work for me. If you are staying in your house on some bogus technicality fine, but don't expect me to glorify you as some modern day Robin Hood and don't expect me to root for you. I'll use a sports metaphor. When the Yankees and Red Sox play, I turn on something else. They can both go to hell.

It's so easy to talk from the perspective of hindsight. Five million foreclosure's to date and rising, and you think all people, every single one of them, trying their best to survive this s**t storm, should be cornered by a supposed high ground of moral ethicacy and judgement? There was none apparent in the banking system. It was all just business to them; a newer grander ever enriching brand series of product's, to yield even more of a squeeze on the ever more strapped pockets of a diminishing middle class, and an ever increasing working class.

Anarchy as a worthwhile social construct was exploded years ago, so these arguments don't work for me. If you are staying in your house on some bogus technicality fine, but don't expect me to glorify you as some modern day Robin Hood and don't expect me to root for you. I'll use a sports metaphor. When the Yankees and Red Sox play, I turn on something else. They can both go to hell.